A Put Option Has a Strike Price of $35 and a Stock

question 15

Multiple Choice

A put option has a strike price of $35 and a stock price of $38. If the put option is trading at $1.25, what is the time value embedded in the option?

• A) $0
• B) $0.75
• C) $1.25
• D) $3

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Definitions:

Unit Value

A measurement or quantity used as a standard or fixed amount in calculations or transactions.

Multiply

To increase in number by a specific factor; in arithmetic, it is the operation of adding a number to itself a certain number of times.